The New Oil in Personalization - How Data Shapes Online User Experiences

“Data is the new oil”

This quote was first coined by Clive Humby, a British mathematician, back in 2006. Since then, many other people have used this concept that perfectly captures the idea that data is one of the most valuable resources in our modern world. Much like oil in the past, companies today desire control over data, knowing that they gain the power to shape realities.

Because of its value, data is used everywhere. Businesses, for example, are leveraging data to create personalized experiences for their customers. Instead of sending generic messages to everyone, companies are using customer data to create targeted content that speaks directly to each customer's interests and needs.

Adapting to the new normal - The rise of personalization

The importance of personalization has grown significantly since the year 2020. We cannot deny that the world has changed a lot due to the pandemic. With everyone at home, the Internet was the primary channel people connected and communicated with companies; so businesses had to rethink how they engaged with their customers.

However, this rapid shift to only digital, caused consumers' expectations to soar, catching many brands off guard. Suddenly, consumers demanded that companies remember everything about them, their identities, origins, and preferences, no matter which channel they interacted through. So, companies had to quickly adapt to meet these new expectations for personalization.

Nowadays, consumers are used to personalized experiences, and they want even more. It's like the saying goes, "The more you get, the more you want.”

Research conducted by Twilio Segment, which surveyed 3,000 companies and consumers to understand their perspectives on personalization, revealed an interesting disparity. Surprisingly, while 85% of companies think they offer personalized experiences, only 60% of consumers agree. Other data emerging from Twilio's report is that 75% of businesses believe personalization is essential, while over half of consumers agree that personalization makes their experience better.

Demographics in personalization… Adequate?

Given expectations, providing customers with personalized experiences isn't just a nice touch; it's essential for a company's survival. Think of it as "personalize or die." And when done right, personalization doesn't just help companies survive – it helps them thrive.

To remain competitive, businesses must create personalized customer experiences, leveraging data to boost conversion, drive customer loyalty, and increase profits. But before you start, you need to figure out what kind of data will help you personalize effectively.

A big part of personalization is understanding customer demographics, which includes information like a person's age, gender, and location. Once the foundation of the personalization strategy, demographic data gives you a basic idea of what your audience is like helping you make some general assumptions about their preferences and behaviors.

Knowing your audience's demographics is useful for creating content that speaks to different groups. For example, you can use language, pictures, and themes that appeal to specific age groups or genders. Or if a particular age group seems to like certain features, you can adjust what you offer to match their needs. But, is this enough?

…or Incomplete?

We can say that demographic data are like your "basic facts" that don't change often, such as a 45-year-old woman living in The Netherlands – these details usually stay the same. That’s why when talking about demographic data, we refer to them as static information because they tend to remain constant over time.

However, the problem with focusing only on demographics is that they are just one piece of the puzzle; they can’t tell the whole story because people who share similar demographics can have very different interests. This is why they come with some limitations:

• Too Basic: Demographics, like age or location, often put people into big groups. But treating everyone in a group the same way doesn't work well for making things personal.
• Not Quite Right: Two people are not the same because of their demographics. They might like totally different things! So, using demographics to guess what they like isn't always right and makes the targeting less effective.
• Missing The "Why": Demographics can't tell us why someone does something, so we miss the Why behind user actions. That can make it hard to really understand what people need.
• Can't Keep Up: Demographic data is usually collected once, when users first sign up or create a profile, and remains relatively stable; but people change their minds over time and want to try new things. Demographics can't keep up with these changes very well, making demographic-based personalization less adaptable.

Behavioral data - The importance of watching what people do

As the famous writer and speaker Dale Carnegie once wisely said, “Pay less attention to what men say. Just watch what they do.” So, instead of just looking at basic facts about people, we should pay attention to their actions. In the world of data, the same principle applies.

Behavioral data is like a goldmine of information for businesses. It tells us what people like and how they behave. It's all about understanding how individuals interact with websites, like which pages they visit, how long they stay there, and what they click on. By analyzing this, companies can learn what their users are really interested in and what keeps them engaged. This information helps companies personalize their website's content to make it more appealing and optimize their conversion rate.

That's why we call it "dynamic data" – it's about what you do and how you interact with things. For example, about the 45-year-old woman from the Netherlands, we mentioned before. She might be researching beach vacations, looking for snorkeling equipment, and frequently visiting travel websites. These actions gave us more info showing what she's interested in right now. Let’s mention a few points to understand why behavioral data are indispensable for personalization strategies:

• Right Now Information: Behavioral data provides real-time updates on how customers are currently using a platform. This helps businesses make quick changes and adapt to meet users' changing preferences in real-time.
• Personalized Experience: When we look at how people behave, we can create experiences that are just for them, matching their unique interests and needs. Knowing what a user has been doing, such as their recent searches and browsing history, helps organizations offer more relevant and meaningful experiences.
• Smarter Recommendations: Behavioral data helps you suggest products or content that users are likely to enjoy. Instead of looking at just their basic info like age or location, businesses can suggest items based on recent user actions.
• Predicting The Future: What’s next? Behavioral data can also help predict future actions and preferences. By analyzing past behaviors, businesses can make data-driven guesses about what a customer is likely to do in the future. This helps businesses to plan.

Data-driven personalization - A Marketer’s Love & Hate Relationship

Even though we've talked a lot about how important personalized experiences are, surprisingly, about 25% of businesses don't use data-driven personalization at all. That's a missed opportunity because studies show that people love it. Think that 71% of customers get a bit frustrated when the experience feels impersonal. On the flip side, 72% of them really like it when they get personalized messages. So, it's clear that personalization is the way to go.

In a digital and connected world, “marketers need the ability to predict - without coming across as intrusive—what their target audience will think, feel, say and do across a variety of scenarios. And with the incredible amount of data available now, personalization is more complex than ever” said Jeremy Hlavacek, head of revenue at IBM Watson Advertising.

Personalization is a key element in marketing strategy, but making it work well can be quite a challenge for marketers. In one survey by Ascend2 involving 190 marketers from all around the world, 63% said that data-driven personalization is the most difficult part of their job. Another study by Gartner found that more than 74% of marketing leaders struggle to scale their personalization efforts.

Prepr CMS - Where a headless CMS meets data-driven personalization

Why complicate life when it's already pretty complex?

A data-driven headless CMS can make personalization easier for marketers. It allows you to create dynamic and personalized experiences for your customers through different channels.

Your choice of CMS is a big deal because it decides how much personalization you can add to your customers' experiences. Prepr is a special kind of CMS. It’s the first data-driven CMS with the ability to personalize content and related digital experiences; in addition, it uses smart technology that gathers data such as behavioral data to create personalized experiences on the Web, mobile devices, or any channel.

With Prepr CMS, you shift your focus to understanding customer intent rather than just demographics. While demographic data has its uses, it's the analysis of customer behavior and intent that gives you even better insights into what they need. By tracking user interactions across various touchpoints, behavioral data is gathered and stored in a centralized repository, ready for marketers to use in a personalization strategy. The CMS takes this behavioral data and uses it to deliver content that's just right for each user; it can suggest products or show articles that fit what the user likes.

In a nutshell, a data-driven headless CMS like Prepr makes it easy to collect and understand behavioral data, and then use that to make content and experiences special for each person.

Going back to what Clive Humby said, he also added:

“Like oil, data is valuable, but if unrefined it cannot really be used. It has to be changed into gas, plastic, chemicals, etc. to create a valuable entity that drives profitable activity; so, must data be broken down, and analysed for it to have value.”

This metaphor beautifully captures the essence of data's potential. What Humby meant is that data, like oil, isn’t useful in its raw state. It needs refining and processing to become valuable. Well, use Prepr CMS for that.

We've put together a helpful guide to get you started with personalization! You can get it by clicking here. Why wait any longer to begin providing personalized experiences?